Overcoming Innovation Challenges in Banks: Need for Strategic Thinking
Traditionally it has been seen that that banks lag their peers in other verticals when it comes to deploying innovation in business. The reason often mentioned is that the pressure for short-term gains overshadows the long term strategy of having innovation led business practices. However, in the context of looming economic crisis, banks need to revisit their way of working and put greater emphasis on innovations to stay ahead of competition and survive the economic challenges in the environment.
One source from where banks can get idea of innovation is its own employees. It has been found that source of ideas mostly come from employees rather than from the top management. Banks hence need to create an environment to incubate these innovative ideas from all strata of the employees, nurture them and put into meaningful and profitable business processes.
The other important source is the analysis of consumer behaviour. Shifting consumer behaviour in the wake of economic downslide worldwide and rapid growth of non-banking financial institutions also pose an opportunity to banks to incubate the innovative ideas. Though this is potentially not so dominant in banks, a focused approach in this area can provide the banks an opportunity to access to many innovative ideas, a careful analysis of which can really do wonders.
The third source is the market dynamics and the competition. Shifting market preference, technology enablement and enhanced speed of doing transactions can also be birth places of innovations.
The fourth source lies in promoting a network of external partners like vendors, customers and even IT service-providers and thrive for innovation through sharing experiences, pain points and challenges across the industry.
However, the emphasis here for the banks is to create an environment to promote innovation both in products and services space aggressively by aggregating all the sources of innovative ideas and then carefully analysing and then promoting them into next level of deployment and adoption. Some of the important levers for enabling this environment are executive ponsorship, availability of funds, suitable incentive structure for employees to innovate, providing a framework to cushion against failures, identification and investment in right set of people, and most importantly, promoting an eco-system that encourages innovation in an appropriate manner, with systematic investment in a long-term strategy.